Thomas Potter, III

Thomas Potter, III

Burr & Forman

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SEC Continues Crackdown on Whistleblower Restrictions: Calls Qui Tam Waivers "Targeting"

The SEC announced its second enforcement action in a week against a company using severance or confidentiality agreements requiring employees to waive whistleblower bounties or their right to bring a qui tam action....more

8/18/2016 - Confidential Information Corporate Counsel Dodd-Frank Enforcement Actions Fines Health Net Qui Tam SEC Securities Violations Severance Agreements Whistleblower Awards Whistleblowers

SEC Fines Company for Agreements Restricting Whistleblowers

The SEC has fined an Atlanta company $265,000 for using various severance agreements restricting whistleblower activities. The Dodd-Frank Act added ’34 Act § 21F encouraging whistleblower programs....more

8/15/2016 - Civil Monetary Penalty Confidential Information Dodd-Frank Employment Contract Rule 21F SEC Securities Exchange Act Securities Violations Severance Agreements Unfair Labor Practices Waivers Whistleblower Awards Whistleblower Protection Policies Whistleblowers

DC Circuit Upholds SEC ALJs in First Merits Opinion

The D.C. Circuit has affirmed that SEC ALJs are not constitutional Officers subject to the Appointments Clause, rejecting perhaps the strongest of the constitutional challenges to the Commission’s administrative forum. The...more

8/10/2016 - Administrative Proceedings ALJ Appointments Clause Article II Enforcement Actions Sanctions SEC Securities Securities Fraud

FINRA Defends Mandatory Arbitrations; Threatens Discipline

In a July 22 Notice, FINRA took umbrage at a growing line of Court decisions suggesting that a later or more-specific forum selection clause in an agreement between the parties may override a prior customer arbitration...more

8/4/2016 - Arbitration Arbitration Agreements Consumer Contracts Financial Sector FINRA Forum Selection

SEC & MSRB’s Pay-to-Play Rule: “Governing Games - Mocking, Part 2”

This SRO gamesmanship is making a mockery of governing. The latest is the SEC’s position that it didn’t take any action on the new MSRB Rules extending pay-to-play prohibitions to municipal advisors, so it can’t be sued...more

8/2/2016 - Bonds Dodd-Frank MSRB Municipal Advisers Municipal Bonds Pay-To-Play Regulatory Oversight Rule G-37 SEC Securities Securities Exchange Act SRO

6th Circuit Joins Majority, Accepting "Materialization of the Risk"

Last month, the 6th Circuit joined the majority view recognizing the “materialization of the risk” theory of loss-causation as an alternative to “corrective-disclosure” in securities litigation under Rule 10b-5....more

8/1/2016 - Corrective Actions Disclosure Requirements Financial Markets Loss Causation Material Misrepresentation PSLRA Rule 10b-5 SEC Securities Securities Litigation Twombly/Iqbal Pleading Standard

11th Circuit Holds Judicial Review of SEC ALJs Premature

The Eleventh Circuit Friday joined three others in concluding that Congress intended Respondents must wait until appeal from the Commission to have a Court consider their challenges to the Constitutionality of the SEC’s...more

6/20/2016 - Administrative Proceedings ALJ Bebo v SEC Enforcement Actions SEC Securities Exchange Act Securities Litigation

Chameleon SROs: The Gov’t, But Not Really

For years, self-regulatory agencies (like FINRA or the Exchanges) have wielded the statutory authority granted them by Congress – and backed by the SEC – exercising governmental power to compel testimony, impose fines and...more

6/9/2016 - Financial Markets Fines FINRA IRS Penalties SEC Securities Exchange Act Securities Regulation SRO Tax Deductions

2nd Cir. Joins 7th & D.C. Requiring Exhaustion to Challenge SEC ALJs

The Second Circuit has affirmed dismissal of “diva of distressed” Lynn Tilton’s constitutional challenge to the SEC’s administrative forum, holding that issue isn’t reviewable by the courts until an appeal after two levels of...more

6/3/2016 - Administrative Appeals Administrative Proceedings ALJ Dismissals Exhaustion Doctrine Judicial Review SEC

11th Cir: SEC Disgorgement, Declarative Relief Subject to 5-Yr Bar

Last week, the 11th Circuit held that the limitations period of 28 U.S.C. § 2462 bars disgorgement or declarative relief for acts having occurred five years before the SEC files an action. The Court drew a distinction...more

6/2/2016 - Cause of Action Accrual Declaratory Relief Disgorgement Enforcement Actions Injunctive Relief SEC Statute of Limitations

It’s Good to be the King: Nullus Tempus Allows TN Fund’s Suit on Decade-Old RMBS Buys

Chancellor Carol McCoy allowed a Tennessee state retirement fund’s securities suit over decades-old RMBS purchases to continue last week, holding that time doesn’t run against the king – even on statutes of repose....more

6/1/2016 - Fraud Investment Funds Misrepresentation Retirement RMBS Securities Violations

TN Securities Division Urges Investors to Question Advisors

In a recent new release, the Tennessee Securities Division urged investors to ask tough questions of their investment advisors, and about their compensation, account arrangements and educational / regulatory history. The May...more

5/31/2016 - Broker-Dealer BrokerCheck Compensation Schemes FINRA Investment Adviser Public Disclosure SEC

DOL Fiduciary Rule Re-Makes Retail IRA Advice

Congress voted this week to de-rail the Department of Labor’s sweeping fiduciary-duty suite of rule-making, but doesn’t have the votes to override the President’s threatened veto....more

5/26/2016 - Best Interest Contract Exemptions Best Interest Standard Conflicts of Interest DOL ERISA Fiduciary Duty Investment Adviser IRA Retirement Plan

I Meant it at the Time: Second Circuit Reverses $1.2BN FIRREA Judgment

It’s hornbook law that a later intentional breach of contract, alone, doesn’t equal promissory fraud. Holding it therefore cannot establish mail or wire fraud, the Second Circuit reversed the Government’s $1.2 Billion FIRREA...more

5/26/2016 - Banking Sector Breach of Contract Countrywide False Claims Act (FCA) Fannie Mae Financial Institutions FIRREA Freddie Mac GSE Mail Fraud Mortgage Fraud Mortgages Wire Fraud

DOL’S New Fiduciary Conflicts of Interest Rules

The U.S. Department of Labor recently announced a new suite of Rules that are a game-changer for any Financial Institution that gives investment advice (including rollovers and distributions) to owners or beneficiaries of...more

5/26/2016 - Best Interest Contract Exemptions Best Interest Standard DOL Employee Benefits ERISA Fiduciary Duty Investment Adviser IRA Retirement Plan

SIFMA Releases Draft Municipal Advisor Rule G-42 Compliance Documents

Starting June 23, municipal advisors will be subject to revised Rule 42 and its heightened engagement letter and disclosure obligations. SIFMA has released exposure drafts of compliance documents to help MAs meet those...more

5/25/2016 - Disclosure Requirements Duty of Care Engagement Letters Fiduciary Duty Financial Markets Municipal Advisers Rule G-42 SEC SIFMA

6th Cir.: American Pipe Doesn’t Toll Statutes of Repose

Affirming dismissal of some lingering Morgan Keegan bond fund actions, the Sixth Circuit joined the Second in holding that American Pipe class-action tolling does not affect the expiration of a statute of repose. The Court...more

5/20/2016 - American Pipe & Construction Co. v. Utah Bonds Class Action Class Certification Securities Litigation Statute of Repose Tolling

FinCEN AML/BSA Amendments Require Beneficial-Owner Look-Through

In AML/BSA rule amendments published May 11, FinCEN will require “covered financial institutions” to implement new beneficial-owner identification and verification as part of their Customer Due Diligence (“CDD”) and adopt...more

5/19/2016 - Beneficial Owner BSA/AML Covered Financial Institutions Customer Due Diligence (CDD) FinCEN

Supreme Court: Exchange Act Jurisdiction = “Arising Under”

The Supreme Court held May 16 that the exclusive federal jurisdiction provision of the 1934 Securities Exchange Act means the same as the “arising under” test for federal-question jurisdiction and does not pre-empt state law...more

5/18/2016 - 28 USC 1331 Exclusive Jurisdiction Federal Jurisdiction Financial Institutions Merrill Lynch Merrill Lynch v Manning Regulation SHO SCOTUS Securities Exchange Act Securities Litigation Short Selling

Municipal Conduct Rule G-42 Effective June 23

The MSRB’s amended Rule G-42 becomes effective June 23, prescribing new conduct standards for municipal advisors and for the underwriters working with them. In advance of the effective date, the MSRB has published...more

5/12/2016 - Amended Regulation Financial Markets MSRB Municipal Advisers Municipal Bonds Rule G-42 SEC Underwriting

FINRA to Expand Broker-Check Reporting

Richard Ketchum, the retiring CEO of FINRA, said that the regulator intends to expand the reporting available through its BrokerCheck® web tool to include relative concentrations of disciplined brokers in industry firms....more

5/10/2016 - Brokers Financial Institutions Financial Markets FINRA Reporting Requirements

TN Securities Div’n Encourages Financial Fraud Investigations

The Securities Division of the Tennessee Department of Commerce and Insurance issued a May 2 press release encouraging consumers to report financial-services misconduct to its Financial Services Investigations Unit....more

5/10/2016 - Enforcement Actions Financial Sector Financial Services Industry Misallocation of Funds Misrepresentation Securities Fraud

TN COA Tosses Fraud & Securities Claims Over “Crazy” Scam

Tennessee fraudulent misrepresentation claims – and “investment contract” claims under the State’s Blue Sky Law – fail the “reasonable reliance” requirement, where the plaintiff himself asserts it’s a fraud because nobody...more

5/2/2016 - Financial Sector Fraud Investment Contract Negligent Misrepresentation

MSRB on Direct Purchases – Transparency Trumps Tower?

The Municipal Securities Rulemaking Board (“MSRB”) issued a concept release last month suggesting that market transparency trumps the direct Congressional prohibition against federal regulations requiring filing of...more

4/29/2016 - Disclosure Requirements MSRB Municipal Securities Issuers Municipal Securities Market Regulatory Oversight SEC Tower Amendment Transparency Directive

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